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Mining Industry


India has enormous mineral potential, as its prospective geology is broadly similar to Western Australia's, particularly in terms of iron ore, bauxite, coal, diamonds, and heavy minerals sand. India has designated 5.71 lakh square kilometres as an area of obvious geological potential (OGP), but only 10% of it has been explored and only 1.5% is being mined.

Five major mineral-producing states, namely Odisha, Rajasthan, Andhra Pradesh, Chhattisgarh, and Karnataka, produce nearly two-thirds of the country's minerals.

Existent Policy Framework

  • The entry 23 of List II (State List) of the Indian Constitution states that states own the minerals within their borders.

  • The entry 54 of List I (Central List) vests the central government with the right to own minerals located within India's exclusive economic zone (EEZ). The Mines and Minerals (Development and Regulation) (MMDR) Act of 1957 was enacted in response to this.

  • Mineral exploration and extraction are regulated by the International Seabed Authority (ISA). It is governed by a United Nations treaty, to which India is a party. India has been granted the exclusive right to explore polymetallic nodules covering an area of 75,000 square kilometres in the Central Indian Ocean Basin.

  • The MMDR Amendment Act of 2015 establishes the Mineral Concessions Grant (MCG) through auctions to increase transparency and eliminate discretion; the District Mineral Foundation (DMF) to address a long-standing grievance of mining-affected communities; and the National Mineral Exploration Trust (NMET) to incentivize regional and detailed exploration to close gaps in the country's exploration, as well as stringent measures to combat illegal mining.

The National Mineral Policy 2019 includes provisions which will give boost to mining sector such as

  • introduction of Right of First Refusal for RP/PL holders,

  • encouraging the private sector to take up exploration,

  • auctioning in virgin areas for composite RP cum PL cum ML on revenue share basis,

  • encouragement of merger and acquisition of mining entities and

  • transfer of mining leases and creation of dedicated mineral corridors to boost private sector mining areas.

  • The 2019 Policy grants status of industry to mining activity to boost financing of mining for private sector and for acquisitions of mineral assets in other countries by private sector

  • It also mentions that Long term import export policy for mineral will help private sector in better planning and stability in business

  • The Policy also mentions rationalize reserved areas given to PSUs which have not been used and to put these areas to auction, which will give more opportunity to private sector for participation

  • The Policy also strives to harmonize taxes, levies & royalty with world benchmarks to help private sector.

  • Among the changes introduced in the 2019 National Mineral Policy are a focus on the Make in India initiative and gender sensitivity in the vision. E-Governance, IT-enabled systems, awareness and information campaigns have all been incorporated into mineral regulation.

  • The new policy emphasises the use of coastal waterways and inland shipping for mineral evacuation and transportation, and encourages the establishment of dedicated mineral corridors to facilitate mineral transportation.

  • NMP 2019 proposes a long-term mineral export import policy to provide stability and to encourage investment in large-scale commercial mining activity.

  • Additionally, the 2019 Policy introduces the concept of Intergenerational Equity, which addresses the well-being of future generations as well as current generations, and proposes the establishment of an inter-ministerial body to institutionalise the mechanism for ensuring sustainable development in mining.

2020 Ordinance

  • Foreign direct investment is permitted at 100% in the coal sector, and global companies may also participate in auctions.

  • Complete discretion over sale, pricing, and captive use is expected to entice a large number of private sector firms to participate in the auction process. Commercial mining permits the private sector to mine coal commercially without regard for end uses. Private companies can either gasify the coal or export it.

  • The companies need not possess any prior coal mining experience in India in order to participate in the auction of coal and lignite blocks.

  • Composite license for prospecting and mining

District Mineral Foundation

Environmental pollution caused by mining activities is a significant issue in the majority of mining areas. This occurs as a result of unscientific and widespread mining (and related) activities, lax pollution standards and monitoring, and ineffective mine management and closure practises. Pollution problems in almost all of India's major mining districts have had a negative impact on people's health and livelihoods.

The objective is to minimize/mitigate the adverse effects of mining on the environment, health, and socioeconomic conditions of people living in mining districts, as well as to ensure a sustainable livelihood for impacted communities.

It is carried out by the District Mineral Foundations (DMFs) of the respective districts, with funds raised from miners by the DMF.

District Mineral Foundation (DMF) is a non-profit organisation established under the Mines and Minerals (Development and Regulation) Amendment Act (MMDRA) 2015 in districts affected by mining operations. The DMFs have been directed to make all major decisions in a participatory manner, in consultation with the village gramme sabhas, and activities based on the "polluter pays principle" cannot be included in PMKKKY( Pradhan Mantri Khanij Kshetra Kalyan Yojana).

60% of the funds will go toward high-priority areas such as drinking water supply, health care, sanitation, education, skill development, women's and child care, senior and disabled citizen welfare, and environmental conservation.

40% of the fund will be used to develop physical infrastructure such as irrigation, energy, and watersheds.

The PMKKKY projects will contribute to the establishment of a hospitable mining environment, the improvement of the living conditions of affected persons, and the creation of a win-win situation for all stakeholders.


To encourage private sector participation in exploration, the government must launch a mission called "Explore in India" and will overhaul the minerals exploration and licencing policies.

It is desirable to have a level playing field for public sector units (PSUs) and private sector companies when it comes to mining concessions.

Encourage technological advancement by reducing import duties on equipment/leading-edge technology for a five- to ten-year period and on technology that improves safety, limits environmental damage, increases productivity, and accelerates growth.


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